Many people ask, How often can you file bankruptcy in Athens, GA? About a fifth of all bankruptcy debtors in Georgia have filed at least once before. Technically, the Bankruptcy Code does not limit the number of subsequent filings. But the automatic stay and debt discharge rules differ, as outlined below.

The Automatic Stay prohibits all creditor adverse actions, such as foreclosure and wage garnishment, while the case is pending. The discharge eliminates the legal obligation to repay a debt.

Regardless of the number of times you’ve filed or haven’t filed bankruptcy in Athens, a Georgia bankruptcy lawyer does more than guide you through the process. Only an attorney can stand up for you in court if things start to go sideways. This risk is much higher among subsequent filers.

Why Do People File Bankruptcy More Than Once?

There is an old myth that lightning never strikes twice in the same place. That’s not true of lightning strikes, and it is certainly not true of the financial storms of life, such as:

• Divorce,
• Chronic illness,
• Serious injury,
• Job loss, and
• Economic downturn.

 

These events trigger most bankruptcy filings in Georgia. And, filing bankruptcy once does not make people immune to these things. In fact, these storms often feed each other. For example, the financial pressures of a job loss might strain a marriage to the breaking point.

Overspending causes or contributes to a number of first filings. Bankruptcy, especially Chapter 13 bankruptcy, helps these families for better financial habits. Alas, some people do not learn the lesson the first time or take full advantage of the tools they have to rework their finances.

Subsequent Filing Rules

Fasten your safety belt for this part of the post. As mentioned above, the subsequent filing rules are a bit complex.

Previous Dismissal

Debtors can voluntarily withdraw their bankruptcy petitions at any time. But voluntary dismissals could have collateral effects on subsequent bankruptcies. Likewise, bankruptcy judges can unilaterally dismiss cases if debtors misbehave. Common misbehaviors include refusing to obey a court order, missing a filing or other deadline, and refusing to cooperate with the trustee (person who oversees the bankruptcy for the judge).

Previous dismissals affect the Automatic Stay for 180 days. Exact rules vary in different jurisdictions. Generally, if the debtor had one previous dismissal in that time period, the Stay only applies if the debtor files a motion with the petition. Two dismissals in 180 days mean the Stay lapses after about a month. Three dismissals in the previous 180 days mean no Automatic Stay at all.

Things are even more complex if the filer used different names. Assume Ellen files bankruptcy and she voluntarily withdraws her petition. Immediately thereafter, Ellen’s husband files bankruptcy over basically the same debts. Technically, Ellen’s husband must file a motion, or else the Automatic Stay does not apply.

Incidentally, using different names and filing in different jurisdictions is evidence of bankruptcy fraud. That’s a much more serious issue.

Previous Discharge

Debtors who receive a discharge must wait a certain number of years before they can receive another discharge. The order of filing and type of bankruptcy both affect the waiting period, as follows:

• Chapter 7 Following Chapter 7: Eight Years,
• Chapter 13 Following Chapter 13: Two Years,
• Chapter 7 Following Chapter 13: Six Years, and
• Chapter 13 Following Chapter 7: Two Years.

 

These rules vary slightly in some cases. Assume Fred files Chapter 13. He pays off 70 percent of his unsecured debts during the protected repayment period. Fred might be eligible for a Chapter 7 discharge after three years instead of six years.

Note these rules only apply to subsequent discharges. The Freds of the world can file again at any time without penalty, assuming they are beyond the aforementioned 180-day dismissal window.

Let’s change the facts of this example a bit. Assume Fred files Chapter 7 bankruptcy because he has some past-due income taxes. The IRS objects to discharge and the judge rules against Fred. After Fred emerges from Chapter 7, the IRS moves to garnish Fred’s wages. 

Fred can file Chapter 13 bankruptcy to stop that wage garnishment. Additionally, because of Chapter 13’s protected repayment period, Fred has up to five years to pay off the tax debt. Fred is not eligible for discharge at the end of the repayment period. But, since he just received a Chapter 7 discharge and his back taxes are paid off, Fred probably doesn’t care about that fact.

When Multiple Bankruptcy Filings Are Considered Abusive

Courts account for a range of factors when determining whether multiple bankruptcy filings are appropriate. One factor they tend to account for very often is whether it appears that a second (or third, or fourth, etc.) bankruptcy filing qualifies as “abusive.”

Sometimes, bankruptcy filings are considered abusive when it’s clear that someone’s financial situation doesn’t meet the means test that is applied to determine whether a request for bankruptcy should be granted.

However, there are also instances when people file for bankruptcy without actually intending to complete their case. They may file for bankruptcy to address a situation involving a creditor they wish to evade or to give themselves more time to address a collection action. Generally, their goal isn’t to actually see a bankruptcy case through to its intended conclusion. Their goal is to abuse the bankruptcy system in their favor.

You don’t want to engage in this behavior. Doing so will jeopardize your chances of future bankruptcy filings being approved. That said, there are potential instances when a court may suspect a filer is engaging in abusive practices when that is not actually the case.

This is another reason to enlist the help of a bankruptcy attorney. If you genuinely aren’t trying to abuse the system, an attorney can stand up for you in court, demonstrating that you have filed for bankruptcy more than once because you truly intend to move forward with your case appropriately.

How to Avoid Filing for Bankruptcy Multiple Times

It’s important to remember that filing for bankruptcy more than once is not an inherently poor decision. There are cases when it’s necessary to file for bankruptcy multiple times.

That said, most people who file for bankruptcy once do not wish to go through the same experience again. That’s why you may want to familiarize yourself with steps you can take to avoid having to file for bankruptcy again in the future. Examples of such steps may include:

Setting Aside Funds & Budgeting

Creating a budget and sticking to it is often cited as one of the most effective ways someone can begin the process of rebuilding their credit after bankruptcy. Setting a budget will help you save money, which will limit your chances of finding yourself in dire financial straits if another situation (such as a job loss or any of the other examples listed earlier) ever arises.

That said, you should strongly consider further optimizing your chances of being prepared for these types of circumstances by setting up an emergency fund. Depositing a reasonably significant amount of money into this fund on a regular basis will give you the peace of mind that comes from knowing you might not have to file for bankruptcy if you ever face an unexpected situation that has the potential to jeopardize your finances.

Undergoing Credit Counseling

Qualifying for bankruptcy already requires completing credit counseling and debtor education courses. However, the required courses are by no means the only ones available to you. There are numerous additional courses and counseling programs that can supplement what you learned in the required ones.

Strongly consider taking such courses or enrolling in additional credit counseling programs after bankruptcy. Doing so will help you learn more about what you can do to limit your chances of having to file for bankruptcy again after you already have in the past.

Negotiate With Creditors

This isn’t always an option in all circumstances. That said, it’s one worth keeping in mind if you believe you may have to file for bankruptcy again due to unpaid debts.

It’s not particularly uncommon for creditors to negotiate with debtors if they have decent reason to believe doing so will satisfy both parties. Before rushing to file for bankruptcy again, look into the matter to determine if negotiation is an option that you should try taking advantage of first.

If you decide you’re going to attempt to negotiate with your creditors, don’t make the mistake of being overly optimistic and assuming that you’ll be able to convince them to settle for less than you owe. While there are circumstances in which creditors will agree to this type of arrangement, it’s generally more common for creditors to allow debtors to pay back what they owe over time. 

You may want to consult with an attorney before reaching out to a creditor directly. A professional with a thorough understanding of these topics can potentially let you know whether negotiating with a creditor is a wise idea.

Alternatives to Filing for Bankruptcy

It’s important to remember that filing for bankruptcy (even if you have already done so before) is often the best way for someone in a difficult financial situation to mitigate their woes and provide themselves with a chance to start over fresh. If you’re at all considering filing for bankruptcy again after having already done so before, it is very smart to consult with a bankruptcy attorney. They can evaluate your circumstances and help you better understand whether this is the ideal option for you.

That said, there are instances when you might also consider alternatives to filing for bankruptcy. As has been already covered, negotiating with your creditors is one option sometimes. Others that you might want to explore include the following:

Debt Consolidation

This is an option worth keeping in mind if you have debts with several creditors. Many people struggle to pay back what they owe when they are indebted to a number of creditors, each who may have a different or unique debt repayment policy.

By consolidating your debt, you only have to pay a single creditor, and can often do so over time. This may help you manage your debts more easily.

There are a number of ways you can consolidate debt. You could take out a debt consolidation loan, which gathers all your debts into a single loan which will typically have lower interest rates and monthly payments than you would otherwise face if you were paying multiple creditors separately. However, the amount of debt you must repay will usually stay the same.

A similar option is to transfer your debts to a low-interest credit card. This is another way to reduce interest rates.

If you own a home, you might also consider using a home equity line to consolidate your debts. Of course, this is only an option if you have significant equity in your home. Additionally, it can be a somewhat risky option. Defaulting on the equity line could give your lender justification to repossess your property. Again, it’s best to discuss your options with experts to evaluate whether the risk outweighs the potential benefits.

Working With a Credit Counseling Agency

Once more, undergoing credit counseling is a wise decision if you want to learn how to avoid needing to file for bankruptcy multiple times. Working with a credit counseling agency can also be helpful because some agencies will help you create debt management plans. The agency can present this plan to your creditors.

If they agree to the terms of the plan, instead of paying your creditors directly, you will make regular payments to the credit counseling agency. The agency will proceed to distribute your payments to your various creditors until full repayment of all your debts. Just be aware that agencies typically charge a fee for this service.

This also isn’t necessarily a foolproof solution. For example, even if you miss just one payment to the credit counseling agency, a creditor can terminate the plan. On top of that, although this is sometimes an ideal alternative to filing for bankruptcy, when you have a debt management plan set up, you still owe the same amount you already did. That’s typically not the case when filing for Chapter 13 bankruptcy.

Borrowing Money

This is often a “last-ditch” option that you may only consider if you have close friends or family who have money to spare and you’re confident you will be able to pay them back. Sometimes, if you just need a safety cushion to help you reestablish yourself financially but you’re struggling to do so because you are in debt and your creditors are actively pursuing what you owe, borrowing money from close family or friends can help you bridge the gap between where you are now and where you will be in the near future once you’re on more stable ground financially.

Exercise your judgment when determining whether accepting a loan from family or friends is a good idea. You don’t want to ruin a relationship with someone important to you by taking their money and not paying them back.

Assets to Sell

Before going this route, you might instead consider whether you have any assets you can sell. Parting with them may be challenging, but it can also be a better option than putting loved ones in what may be a difficult financial situation that can result in lasting damage.

While the Bankruptcy Code puts no restrictions on the number of bankruptcy filings, the automatic stay and debt discharge rules are different. You need to pay special attention to the subsequent filing rules to wade through the rough financial waters in your life. If you find this complex, it is a good idea to hire a reputed bankruptcy lawyer in Athens, Georgia, who will help you through the process and protect your rights during your trying times.  

Contact a Trustworthy Bankruptcy Attorney in Athens for Debt Relief

It is possible to encounter severe financial crises and debt-related issues more than once in your life. Fortunately, the Bankruptcy Code does not limit the number of subsequent filings, which means if the need for a subsequent bankruptcy arises, you will have legal options to get relief. However, this isn’t as easy as it sounds.

For a free consultation with an experienced bankruptcy lawyer in Athens, contact Morgan & Morgan, Attorneys at Law P.C. at (706) 843-2905. We routinely handle matters in Clarke County and nearby jurisdictions.